Learn how Net Asset Values (NAVs) are calculated for Registered Private Funds in the Cayman Islands is essential for most of the PEVCs. These rules, although it was issued in July 2020, many General Partners (GPs) remain unaware of its profound impact on fund administration practices. It’s issued under the Monetary Authority Law (2020 Revision), outline the process for determining a fund's NAV, ensuring fairness, reliability, and accuracy. Key points include:

🔹 Objective: The rules establish guidelines for calculating NAVs for Private Funds registered under the Private Funds Law (2020) excluding Alternative Investment Vehicles.

🔹 Definitions: Key terms like Fund, NAV, Fair Value, and Hard-to-Value Assets are clarified to ensure consistent understanding.

🔹 NAV Calculation Policy: Funds must have a clear policy ensuring reliable and accurate NAV calculation, in accordance with international financial reporting standards or accepted accounting principles.

🔹 Methodology: The NAV calculation must align with accounting principles used in the fund's audited financial statements, and must detail valuation practices, price sources, and escalation procedures.

🔹 Fair Value: Fair Value is emphasized as the basis for valuing investments, with techniques appropriate to each investment's nature and circumstances.

🔹 Pricing Models: For Hard-to-Value Assets, Pricing Models can be used, provided they're verified and practical, and consistent with the NAV Calculation Policy.

🔹 Oversight: The Operator(s) of the fund are responsible for the entire valuation process and must review the NAV Calculation Policy and Pricing Models annually.

🔹 Enforcement: Breaches of these rules will be handled according to the Authority's regulatory policies, alongside powers in the Private Funds Law and Monetary Authority Law. As a seasoned Private Equity and Venture Capital (PEVC) fund administrator, Precision Fund Services is primed to be your partner in optimizing your fund management journey. With a profound understanding of the intricate PEVC landscape, we offer a comprehensive suite of fund administration services that cater to the diverse needs of PEVC funds.